Will Medicare patients be left out of the bionics revolution?

Millions watched during the 2014 Ted conference as dancer Adrianne Haslet-Davis, who lost a foot in the Boston Marathon bombing last year, perform for the first time since the terrorist attack.

But if Haslet-Davis had relied on Medicare for her health insurance, she would have been denied access to the revolutionary prosthesis made by Bedford, Mass.-based BIOM. That’s because the government health insurer won’t reimburse patients for the cutting-edge device, which can cost as much as $150,000.

"Bionic integration and how electro-mechanics attach to the body and [are] implanted inside the body are beginning to bridge the gap between disability and ability, between human limitation and human potential," BIOM founder Hugh Herr, a robotics professor at the Mass. Institute of Technology and a double amputee, said during a presentation at the TED conference.

But the most important point in Herr’s presentation may have been a little-noticed reference to Medicare.

"Next week," Herr said. "I’m going to present to the Centers for Medicare & Medicaid Services to the appropriate code so the patients who need it can get it."

BIOM (formerly known as iWalk) is a driving force in the bionics revolution. But it’s also an example of how cutting-edge medical technology is constrained more by questions of cost than the capabilities of engineering.

The BIOM T2 bionic ankles are part of a new generation of "smart" prosthetics that seek to restore normalized function of human limbs to amputees. The company’s bionic ankle emulates the muscle function of a human ankle using computer processors that are able to "adjust the ankle’s stiffness and propulsive torque 500 times a second," the company says. The result is a prosthetic that can mimic a person’s natural gait, reducing many of the long-term health problems associated with prosthetic limbs.

Officials at BIOM are bullish on the power of their personalized bionics to dramatically improve lives for the tens of thousands of patients suffering from lower limb loss. But most of those patients, who rely on Medicare for their health coverage, don’t have access to the technology.

The BIOM is one of the costlier prosthetics on the market – up until January of this year insurance companies reimbursed physicians anywhere from $50,000 to $150,000 for the devices, according to BIOM. Although the device is covered by the U.S. Defense Dept., the Veterans Affairs Dept. and various private worker’s compensation plans, the device remains in reimbursement limbo at the Centers for Medicare & Medicaid Services (CMS).

BIOM CEO Tim McCarthy tells MassDevice.com that even though CMS issued a specific reimbursement code for the BIOM and set a reimbursement rate, it ultimately determined that Medicare would not cover the BIOM.

"Even though they’ve given us the code, given us the fee, it’s a non-Medicare covered item, so any Medicare covered patient who wants the BIOM would either have to get supplemental insurance or pay out of pocket. Medicare is not paying for the BIOM at this stage," McCarthy told us. "They didn’t do us any favors."

Medicare patients make up just one-third of the potential patient population for the BIOM, he estimated. But winning reimbursement from the health agency is key to bringing the device to more people, because private health insurers look to Medicare to set the baseline for their own coverage decisions.

In that sense, Medicare and Medicaid are the most important bodies in health insurance. "They don’t want to see it this way, but they are market-breakers or market-makers for all these technologies," McCarthy said. "The BIOM not for everybody today, but if we get a runway through payer channels there there will be a BIOM for everyone [who needs it]."

BIOM has put more than 1,000 systems on the market, about half to military personnel who lost limbs in combat. The company has always had a strong connection to the VA and the Defense Dept.; BIOM was partially funded by the federal government, part of a $500 million push to create better prosthetics. BIOM is the only commercialized technology to spin out of that investment, McCarthy said.

Roughly 50,000 patients are fitted with a prosthetic leg every year. More than two-thirds of those follow amputations due to vascular disease; the rest represent industrial or automobile accidents and military combat injuries, according to McCarthy.

To win coverage under Medicare, BIOM must demonstrate the cost advantage of its prosthetics, something McCarthy says the worker’s compensation industry already recognizes. The BIOM device, for example, allows employees to return to work more quickly and reduces the need for treatment over the long term. Patients experience less pain and stress on their joints than with normal prosthetic limbs, he explained.

"Their goal is to compress costs. They see a pioneering technology and have a pessimistic view of it," he said.

BIOM is not the first company to confront Medicare with expensive technology that radically re-thinks current standards of care for the disabled. Take the iBOT, a stair-climbing, gyroscope-based wheelchair invented by Dean Kamen’s DEKA Research & Development Corp. in Manchester, N.H.

The iBOT, which DEKA developed with Johnson & Johnson subsidiary Independence Technology LLC, carried price tag in excess of $25,000. But J&J shelved the product in 2009 after CMS made it eligible for only about $6,000 in reimbursement.

McCarthy views the iBot story as a cautionary tale for BIOM.

"We know the people who receive the BIOM’s are healthier, but we don’t know the dollars saved over the course of a lifetime," McCarthy said. "Our job is to present data and say to (Medicare), ‘You’ll see people that received our implants for 20 or 30 years and they’ll be healthier in the long term."